Biomet up with numbers; HealthSouth slides; Zuffa sets pricing, breaks; Skype tweaks deal

By Sara Rosenberg

New York, Oct. 9 - Biomet Inc.'s term loan B headed higher during Friday's trading session following the release of quarterly earnings results and HealthSouth Corp.'s term loan softened with the launch of an amend-and-extend proposal.

In other news, Zuffa LLC finalized pricing on its incremental term loan at the wide end of guidance and then freed the deal up for trading, Skype Technologies (Springboard Finance LLC) increased pricing on its credit facility, and USI Holdings Corp. announced that it will be approaching the market with a new incremental term loan.

Biomet strengthens

Biomet's term loan B gained some ground as the company released financial results for its first fiscal quarter ended Aug. 31, according to traders.

The term loan B was quoted by one trader at 96¼ bid, 97 offered, up from 96 bid, 96¾ offered, and by second trader at 97 bid, 97½ offered, up from 96½ bid, 97 offered.

For the first quarter, net loss was $22.8 million, compared to a net loss of $59.9 million last year. Excluding special charges and stock compensation expense in both periods, adjusted net income totaled $49.2 million during the first quarter, compared to $13.8 million in the previous year.

Operating income for the quarter totaled $79.1 million, compared to operating income of $57 million for the first quarter of fiscal year 2009. Excluding special charges and stock compensation expense in both periods, adjusted operating income for the quarter increased 12% to $192.1 million or 30.5% of net sales, compared to $171.6 million or 28.3% of net sales for the prior-year period.

Biomet EBITDA improves

Biomet also said on Friday that its adjusted EBITDA for the fiscal first quarter was up 11% to $230.3 million, or 36.5% of sales, compared to adjusted EBITDA of $207.0 million, or 34.1% of sales, in last year's first quarter,.

Free cash flow was $1.6 million for the first quarter and unlevered free cash flow totaled $59.8 million.

At Aug. 31, net debt was $6.01 billion, with cash on hand of $226.4 million. The company has decreased net debt by $134.9 million since Sept. 25, 2007.

At the end of the first quarter, the company's senior secured leverage ratio was 3.66 times, compared to 4.7 times at Sept. 25, 2007. As of Aug. 31, the net debt leverage ratio was 6.12 times adjusted LTM EBITDA, including run rate cost savings, compared to 7.7 times at the merger date.

Biomet is a Warsaw, Ind.-based designer, manufacturer and marketer of products used primarily by musculoskeletal medical specialists in both surgical and non-surgical therapy.

HealthSouth dips

HealthSouth's term loan was a little lower on Friday on the back of the company's conference call that launched an amendment to lenders requesting a two-year extension of its term loan, according to a trader.

The term loan was quoted at 97½ bid, 98½ offered, down from 97¾ bid, 98¾ offered, the trader said.

"Usually [the existing] does trade down because the extended usually has better terms," the trader added.

Under the amendment proposal, the company is offering pricing of Libor plus 375 bps on extended term loan debt, compared to existing pricing of Libor plus 225 bps.

In addition, the amendment would give the company the ability to issue senior secured bonds to repay bank debt.

Consenting lenders will get a 10 bps fee.

JPMorgan is leading the deal.

HealthSouth is a Birmingham, Ala.-based provider of inpatient rehabilitation services.

Zuffa firms pricing

In more loan happenings, Zuffa nailed down pricing on its $100 million senior secured incremental term loan (Ba3/BB-) on Friday, setting the spread at the wide end of initial talk, according to a market source.

The term loan is priced at Libor plus 550 basis points, whereas guidance had the deal talked at Libor plus 500 bps to 550 bps, the source said.

The deal was oversubscribed. There were, however, a number of orders that were based on the Libor plus 550 pricing, which is why it ended up at that level.

Falling in line with talk was the Libor floor, which is 2%, and the original issue discount, which is 97.

Zuffa breaks

After finalizing pricing, Zuffa gave out allocations on its term loan and hit the secondary market, with levels quoted above the original issue discount price at which it was sold, sources said.

The term loan was quoted by one source at 99 bid, par offered, and by a second source at 98½ bid, 99½ offered.

Deutsche Bank is the lead bank on the deal that will be used to repay revolving credit facility borrowings and to fund a dividend.

Zuffa is the Las Vegas-based company that owns the Ultimate Fighting Championship brand.

Skype raises pricing

Back over in the primary market, Skype revised pricing on its $600 million five-year term loan on Friday and increased the original issue discount, according to sources.

The term loan is now priced at Libor plus 750 bps, up from initial talk of Libor plus 600 bps, and the original issue discount was sweetened to 96 from 97, sources said.

The 2% Libor floor remained unchanged.

JPMorgan, Barclays and RBC Capital Markets are the lead banks on the $630 million credit facility (B1/B) that also includes a $30 million four-year revolver.

Skype being acquired

Proceeds from Skype's credit facility, along with equity, will be used to help finance the purchase of a 65% stake in the company by an investor group led by Silver Lake and including Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.

eBay Inc., the current owner of Skype, will retain a 35% interest in the company. eBay is expected to receive about $1.9 billion in cash upon the completion of the sale and a subordinated note from the buyer in the principal amount of $125 million.

The acquisition, which is not subject to a financing condition, is expected to close in the fourth quarter.

Skype is a Luxembourg-based software that enables individuals and businesses to make free video and voice calls, send instant messages and share files with other Skype users.

USI sets launch

USI Holdings revealed that it will be holding a conference call on Tuesday to kickoff syndication on a new $100 million incremental senior secured term loan (B-) that is being led by sole lead arranger Goldman Sachs.

Proceeds will be used for general corporate purposes.

In June, the company had approached the market with a $117 million incremental senior secured term loan (B-) due in May 2014 that was going to fund a tender offer for up to $100 million of its outstanding senior floating-rate notes due 2014 and 9.75% senior subordinated notes due 2015.

However, the loan was pulled because the tender offer was terminated as a result of minimal participation in the tender.

The pulled loan was being talked at Libor plus 575 bps with an original issue discount of 90.

According to an informed source, price talk on this new transaction is expected to come cheaper since the credit markets are different now.

"Markets have improved and that's why [they're] tapping the market at this point," the source explained.

USI is a Briarcliff Manor, N.Y.-based distributor of property and casualty insurance and employee benefits products.

Executive Health pulled

Executive Health Resources Inc.'s proposed $170 million credit facility that was supposed to launch on Friday was pulled from market, according to sources.

The facility was going to consist of a $10 million revolver and a $160 million term loan.

Credit Suisse was going to be the lead bank on the deal that would have been used to pay a dividend to ABRY Partners and repay bank debt.

Executive Health Resources is a Newton Square, Pa.-based provider of specially trained, technology-supported physician advisors to hospitals.

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